Is the Slump in the Stock Prices of Oilfield Service Companies Justified?

July 27, 2022 Article by Jeffrey Price

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In this space, we have chronicled the peculiarly slow ramp-up in drilling activity that has followed the dramatic resurgence in oil prices.  We have also noted that this recovery clearly appears to be ushering in a period of sustained prosperity.  In other words, we take the position that the industry is not in the midst of a quick bust-boom-bust cycle.  That’s due to extremely strong fundamentals on both the demand-side and supply-side.  That’s doubly true if you are situated in the Permian Basin. 

And the Wall Street Journal in a recent report sees it the same way (https://www.wsj.com/articles/oil-doesnt-have-to-boom-for-these-companies-to-thrive-11658506682?st=i7hzwrnfrcz9sis&reflink=desktopwebshare_permalink).  Thus, the stock market sell-off, that was prompted by the peaking out of WTI in early June, was clearly a serious overreaction.  The industry’s fundamentals remain strong, and they will be resilient. 

Many of the clients that have set up shop in the First Keystone Pecos Industrial Park also see it this way – they are taking the long view.  And that’s why First Keystone is committed to developing Class A office and industrial space for sale in the Pecos area. 

The opinions expressed above reflect only those of the author and do not represent those of the First Keystone Pecos Industrial Park organization.  First Keystone welcomes responsible fact-based discourses on these topics.